/ 7 July 2017

Audit regulator refers irregularities found at Transnet, Eskom for investigation

The audit regulator said that it could not disclose nature of the irregularities but they will be referred to the relevant authorities
The audit regulator said that it could not disclose nature of the irregularities but they will be referred to the relevant authorities

Two major parastatals, Transnet and Eskom, are in hot water over auditing irregularities.

The Independent Regulatory Board for Auditors (Irba) said on Friday that it had referred continuing “reportable irregularities” at the two state owned companies to authorities, among them the Hawks, for further investigation.

Under the auditing profession Act, a reportable irregularity is an unlawful act or omission by the management of an entity that has, or is likely to cause material financial loss to the company or its shareholders, creditors or investors; is fraudulent or amounts to theft; or represents a breach of fiduciary duty.

According to the audit regulator two such problems raised against Eskom and its subsidiary Eskom Rotek Industries were found to be continuing, and will be forwarded to the relevant authorities including the Companies and Intellectual Property Commission, the Auditor-General and the Department of Public Enterprises.

Of two reportable irregularities flagged at Transnet one has been found to be ongoing and will be referred to the relevant authorities including the Hawks, the Auditor-General, the Department of Public Enterprises and the Department of Labour. A second reportable irregularity was no longer continuing the regulator said.

Transnet and Eskom’s auditors SizweNtsalubaGobodo first disclosed the irregularities to the industry watchdog.

Under the act an auditing firm must report irregularities of this nature to the regulatory board. It then has 30 days to compile a report determining if the irregularities do in fact exist, and if so whether they are on going or not. If they are found to be continuing, they must report this to the board who, in turn, refers the matter to the relevant authorities for investigation.

The audit regulator said that it could not disclose the nature of the irregularities.

Neither Eskom nor Transnet were immediately available for comment.

But both parastatals have been mired in controversy in recent weeks.

The release of the #GuptaLeaks email dossier has bolstered longstanding allegations of corruption at both companies. In the case of Transnet, the amaBhungane centre for investigative journalism has reported how Gupta related entities allegedly siphoned off billions in a locomotive procurement contract.

The role of auditing firms in the #GuptaLeaks saga has also come under fire. AmaBhungane reported last week that KPMG appears to be implicated in assisting the Gupta’s to allegedly launder R30-million from a state dairy project to pay for a lavish family wedding in 2013.

Although KPMG terminated it relationship with the Gupta group of companies in 2015, the audit watchdog said that it would investigate KPMG’s role in the matte